Panel Analysis of relationship between GDP and Consumer Price PDF

Panel Analysis of relationship between GDP and Consumer Price Index, Unemployment rate,
GDP deflator
Student name:
Student number:
Lecturer name:
Date: 6th November 2018
1 | P a g e

Abstract
This report presents a panel analysis study that was performed to investigate the relationship
between GDP deflator (GDPF), unemployment rate (UR) and the inflation rates (CPI) with the
nominal Gross Domestic Product (GDP), during/after and before the global financial crisis of
2008. Annual data for 24 succeeding years for three countries (United States, France and South
Africa) have been included in the panel. For us to be able to obtained a more overwhelming
comprehension of the impacts of the global crisis on the relationship between the variables, we
split the panel data set into 3 panel categories, that is, Panel 1 (1994-2007) represents the panel
for the before-crisis, Panel 2 (2008-2017) represents the panel for the during and after crisis
while Panel 3 (1994-2017) represents the long-run panel. We used Stata to analyze the data.
2 | P a g e

Table of Contents
Abstract............................................................................................................................................2
Introduction......................................................................................................................................4
Methodology....................................................................................................................................5
Results..............................................................................................................................................6
Descriptive analysis.....................................................................................................................6
Model Interpretation for Panel 1......................................................................................................7
Model Interpretation for Panel 2......................................................................................................8
Model Interpretation for Panel 3......................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
Appendix........................................................................................................................................13
3 | P a g e

Introduction
The 2007/2008 global crisis on finance began in the United States (US) and was as a result of a
serious liquidity inadequacy among monetary institutions when they got confronted with
unforgiving economic situation while trying to transfer the short term debts. Thusly,
indebtedness among those foundations began to become a normal issue and not long after, a
noteworthy investment bank in the US by the name Lehman Brothers came down in September
2008. This led to a drop in the certainty level and compelled the investors to generously sell and
close their positions, making the share trading system dive. Subsequently, the money related
market of the European Union (EU) was thumped down to its most reduced since the retreat of
early1930s (also known as the Great Depression).
This study therefore was performed to investigate the relationship between GDP deflator
(GDPF), unemployment rate (UR) and the inflation rates (CPI) with the nominal Gross Domestic
Product (GDP), before and after the 2008 global financial crisis. The aim was to check how the
global financial crisis influenced the effect that the independent variables (GDP deflator (GDPF),
unemployment rate (UR) and the inflation rates (CPI)) had on the dependent variable (nominal
Gross Domestic Product growth rates (GDP)).
4 | P a g e